WHEREAS, many local and state governments are
struggling to provide retirement security for employees over the long term
while dealing with structural budget problems, tax base and investment losses
from the economic downturn, and other fiscal pressures;

WHEREAS, dealing with
these pension costs contributes to cuts in public services, layoffs, and
deferral of infrastructure projects;

WHEREAS, in many cases,
the rising costs of providing pension and retirement benefits have resulted in
significant contribution increases borne by public sector employees;

WHEREAS, local and state
governments are proposing changes to pension plan offerings that can address
budget problems while also reducing the cost of retirement benefits to public
sector employees through their voluntary election of alternative plans;

WHEREAS, public sector
employees should have an opportunity to voluntarily choose participation in a
lower-cost benefit plan rather than make higher payments;

WHEREAS, federal law and
U.S. Treasury Department guidelines, rulings, and review processes related to
determining the tax treatment of retirement plan contributions impact whether
local and state governments can effectively offer those choices to employees;

WHEREAS, current federal
standards are unclear and could expose employees to new federal taxes on their
pension contributions under various new plan options;

WHEREAS, federal
administrative, regulatory, and/or legislative action is needed to clarify
these tax issues and enable offerings of alternative pension plans that would
ensure a more sustainable pension system, reduced costs to employees, and
stronger local and state government financial conditions;

WHEREAS, the U.S.
Treasury Department has been asked by several local and state governments to
review such pension plan proposals and issue such guidance.

NOW THEREFORE, BE IT
RESOLVED that the U.S. Conference of Mayors calls upon the U.S. Treasury
Department to expeditiously promulgate clarifying guidelines or rules that
ensure favorable tax treatment of certain retirement plan contributions picked
up by governmental employers when employees are given an option to choose a
lower-cost plan.

BE IT FURTHER RESOLVED
that the U.S. Conference of Mayors urges Congress to enact any necessary
legislation that would enable such Treasury policies, and otherwise facilitate
local and state governments’ ability to work cooperatively with employees and
unions in addressing long-term structural pension plan issues.